As Egypt seeks to redefine itself in the post-Mubarak era, the Grapel case recasts the old Egypt, where alleged Israeli conspiracies against the country were the staple of media and politics, with a new Egypt in which freedom of expression given more sway and the media is freer to cater to populist sentiment.

"The capturing of Israeli spies by General Intelligence is considered a painful blow to the Mossad, highlighting its failure to recruit collaborators sent into Egypt before and after the January revolution," Egyptian daily Al-Ahram wrote on Wednesday. "Ilan won’t be the last Israeli spy. The following days may reveal other such cases, but Ilan is considered the most dangerous espionage case in years."

But according to all accounts Egyptians have reacted with sarcasm and skepticism to charges grapnel is a Mossad operative noting he appeared to be breaking a fundamental rule of espionage by documenting his entire sojourn in Egypt with photos and Facebook comments. Grapel also happily admitted there he had served in the IDF and was wounded in the 2008-09 Cast Lead operation.

"Like other sensible Egyptians, I'm very skeptical about this story," Joseph Fahim of the English language Daily News Egypt told The Media Line. "Everyone in Egypt is calling him 'the stupidest spy in the world.’ The whole thing sounds like it was taken from an Austin Powers movie."

Fahim opined Grapel's arrest is probably nothing more than a case of bad intelligence, or an attempt by the government to deter real spies from entering the country at a time of increased instability.

Television journalist Ibrahim Issa told viewers on the RNN station Tuesday the allegations reminded him of former intelligence chief Omar Suleiman blaming "foreign intervention" in Egyptian affairs for the popular uprising that eventually deposed President Hosni Mubarak last February.

"All these silly hallucinations … which were constantly repeated in a crazy manner by the media and political officials until recently, are coming back with the announcement of this spy," he said.

But Hani Henry, a psychology professor at the American University in Cairo, said media coverage of the spy case was different than in the Mubarak era. Instead of kowtowing to the government the media are choosing to run the story because its sensationalistic value will lure readers and viewers.

"Conspiracy theories are a big part of Egyptian culture," Henry told The Media Line. "There’s a long tradition of misleading the people both by the government and the media. The majority of Egyptians believe that he is a spy."

Sophisticated Egyptian elites express their opinions on Facebook or Twitter, but most people believe the news reported in the mainstream media, Henry added.

But limited to 'elites' or no, the Grapel case has led to a plethora of ironic Facebook pages making fun of the Egyptian government, including a parody of the popular Mubarak-focused "We're sorry, Mr. President" page entitled "We're sorry Mr. Spy."

"Tomorrow people will discover that the entire story was fabricated and open a group called 'We apologize, fool," the page administrator noted.

"God save us from the Egyptian media and the national Egyptian newspapers. Stop underestimating the intelligence of the Egyptian people," he added.

"In time when tourism is down, he encourages tourists – he goes to the pyramids and tourist sites. We love you, Mr. Spy, and we will never forget your kindness," on said of the now iconic among Egyptian skeptics photo Grapel had taken of himself hugging a tour guide in front of a pyramid.

Grapel, a 27-year-old American-Israeli law student from Emory University in Atlanta, was in Egypt as a volunteer with a U.S. refugee agency when he was arrested in Cairo over the weekend.